- 8 - section 871(a); (2) if the income is effectively connected with a trade or business within the United States, or if an election is made to treat the income as effectively connected, the tax is computed pursuant to section 871(b), on net rental income at the graduated rates prescribed by section 1, provided that the taxpayer has filed a return as required by section 874(a); and (3) where the income is effectively connected and the taxpayer fails to file a tax return as required by section 874(a), the tax is computed on gross rental income at the graduated rates prescribed in section 1. Petitioner, while recognizing that section 874(a) disallows deductions if no return is filed, asserts that he did file returns for the years in question. The issue, therefore, is whether the returns submitted on October 7, 1993, after respondent notified petitioner that he had not filed returns and after respondent prepared returns for petitioner but before the notice of deficiency was issued, satisfy the requirements of section 874(a). On its face, section 874 contains no time limit within which a nonresident alien must file an income tax return. For taxable years ending after July 31, 1990, the regulations explicitly create a timely filing requirement. Section 1.874-1(b)(1), Income Tax Regs., as amended by T.D. 8322, 1990-2 C.B. 172, 173, provides, inter alia, thatPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011